A note to myself on Funding Startup | Pros and Cons of raising funds.

I recently started to meet investors and I think, I will likely get funded. I have rejected a few investors, to be honest due to their poor mindset, cleap thinking on founders and ignoring their experience. That’s right! You want an investor who helps you grow, not shove you like First Time Founder even when you have experience and know-how shi*t works.

Anyway?

Should you raise funds?

Raising fundings can be the 1st thing that comes to mind after reading tech crunch, business insider, twitter, LinkedIn, inc42, yourstory and etc but trust me, it’s not just the right way to go about a business.

I have seen many businesses raise and they fail because they never figured out their profit and preassumed a lot of things.

Raising funds is just one way, you can go bootstrapped, you can do a partnership, and you can bring in a founder who is ready to invest as a sleeping partner.

Raising funds is one way to start a company especially when you have something big that has to be built and you depend oa n that. For service business that gets upfront payment, you often would no require funds.

For products, you need to raise fund to start as you need employees and resource way before you start making money. The amount will not be small, it will be big.

How to build a big SaaS company in bootstrapped/self-funded way?

  1. Start Small
  2. Fulfill Properly
  3. Start Charging
  4. Invest Back the earned money by Hiring Cheap (May be hiring good engineering interns)
  5. Build new features that are actually requested by the client or likely going to succeed
  6. Depending on free customer acquisition channels overpaid marketing (ie: Quora Q&A, Col Email, Cold call, Linkedin Outreach, Twitter Thread, Insta Videos, Tools with Listicle, Free tool Series, Business Tools Series, Community event for the targetted audience. Attack some free features to gain customers and let them use all features all the time.
  7. Test Features by onboarding a small number of users and Test security using any freelancer/good consultant from Fiverr who is just getting started. Look if the person has the experience and hire for cheap as you have less money to spend.
  8. Now, onboard paid customers who requested the feature and give a free trial to people who are likely customers. See if you are at the right price point, once you are, then start marketing to all existing users, and start selling in a bundle.
  9. and, now charge more in a bundle, start cold emailing, start cold calling, start doing startup events
  10. Doing whole will take time and will be an awesome journey to have.

No! Don’t want to spend 2-3 years figuring out your product and product market fit?

Have everything figured out and it is B2B, then Raise Funds, Build Tech Team, Build Marketing Team, Build Sales Time, Bring Database, and Start Selling. If you have not figured out your profit, you will likely fail.

7 ways startup funding may go wrong 

  1. Blinding the founder (Founder hires immediately, forgets that they have to find PMF, and gets lost in operation because they hired too many employees from funds they raised)
  2. Not being conservative on expenses
  3. Not using the “resources you need” vs “resources you want”
  4. Not hiring people who can be good with training and support but hiring people who are actually good already. (It’s good if you have a lot of funds, otherwise have an expert who trains your low-experienced employee and gets things done)
  5. Very tempting to spend on paid marketing
  6. Very tempting toand  hire sales, operation employees from big companies (Again, bringing expert consultant and teaching the junior but can be good, having a really experienced person form insutry you are targeting can really be company saving. I would never have a 2nd doubt on hiring a salesperson from the same industry, or a competitor for this. Not hiring the right sales can break the company even if the product is good)
  7. Not investing in long-term cost-cutting leads acquisition process because paid one gives instant result

7 ways funds help a startuthe p (most of above criteria should be followed anyway) 

  1. Can hire really good tech employee(Subject matter expert)
  2. Faster Customer acquisition for PMF
  3. Can have people who can onboard, support, and brings feedback from customers
  4. Once PMF is found Investing huge in customer conversion-focused organic traffic
  5. Once PMF is found Investing huge in audience-focused organic traffic to build brand awareness and trust
  6. Once PMF is found Investing huge in audience-focused free tool building to build brand awareness and trust (ie: canvas, business card maker, Article title recommender, Interactive, Checklist, Checklist like project management, Mail Subject Line generator)
  7. Once PMF is found Investing huge in Research papers for lead generation (Fill form and download)
  8. Once PMF is fit, Investing huge on
  9. Funds can be used to build a competing product
  10. Funds can be used to onboard customers and gain market share
  11. Funds can be used to migrate customers from competitors (steal customers) for a free product offering and sell other products for paid-in a bundle
  12. and gain market share
  13. Funding gives peace of mind in execution after PMF and gives enough time to scale (Hiring too many before will be an absolute shit show if not controlled)
  14. Money brings mone in pocket which can allow you to meet fancy business people, tech experts in fancy places who may like to return the favor can be helping your engineer with the code he is stuck at. (Sounds cheap but have an actual impact and solves a real problem, You can do it in a self-funded startup t o assuming you are doing okay with revenue).

Get in Touch